Amazon reportedly rethinks NYC HQ2 after backlash

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Dive Brief:

Amazon is reconsidering its plan to open a new campus in New York's Long Island City following backlash, two unnamed sources told The Washington Post. Residents, advocacy groups and some politicians are upset by the prospect of giving the company large subsidies, along with concerns over rent hikes and displacement. Executives reportedly have had internal discussions to explore alternatives to the Queens campus, though there are no specific plans to ditch the plan for Amazon's second headquarters — nicknamed HQ2.

The contention in New York contrasts Amazon's warm welcome by Northern Virginia, the other location for HQ2. This week, Virginia officials passed an incentive package that includes up to $750 million in state subsidies for the proposed National Landing campus.

Meanwhile, leaders in Tennessee are embracing Amazon's plan to bring 5,000 jobs to a new Nashville hub. Officials this week approved $15.2 million in infrastructure improvements related to the project.

Dive Insight:

Amazon's attempt to establish a stronger foothold in New York comes as the e-commerce giant continues to ramp up its presence in the digital advertising space, which is currently dominated by Facebook and Google. It's still unclear how much Amazon's blossoming ad business had to do with its selection of Long Island City for HQ2, but the area is close to the city's Madison Avenue hub of marketing agencies, brands and major media players. However, if Amazon were to follow through on the alleged threat and pull out from the plan, it could impact agencies and brands alike.

The company's presence near Madison Avenue would conceivably enable it to dip into the talent pool of both ad agencies and marketing consultancies as Amazon works to sharpen its expertise and beef up its ad offerings. Amazon is reportedly experimenting with direct brand relationships, rather than working with agencies to negotiate deals, in a strategy more traditional platforms have been slower to explore.

Moving HQ2 to another location could also impact Amazon's ability to find the best tech talent at a time when it is expanding rapidly, with New York beating out San Francisco and other cities in a ranking of the best tech cities, according to a report earlier this week.

At the same time, chief rival Google also appears to be looking into a bigger presence in New York. In December, the search giant announced that it's putting $1 billion toward a sprawling campus in the city.

While it's unclear what Amazon's plan B is if the New York City project falls through, The Washington Post's sources suggest that the company may be threatening to pull out of the Queens campus in order to put pressure on city and state officials to seal the deal. Final approval for the campus by officials isn't expected until 2020. Amazon must decide soon, however, as it needs to start hiring the 25,000 employees for the Manhattan-adjacent campus if it wants to stick with its scheduled timeline.

Politicians, locals and advocacy groups appear to be trying to avoid side effects of an Amazon invasion — rent hikes, crippling traffic and giving the lucrative company substantial tax breaks — as Seattle experienced during Amazon's explosive growth there over the past decade.